Successfully growing your business means you utilize data to steer your company in the right direction. Understand how to develop a dashboard that measures company performance. Learn the top 5 things every business owner should know about their business, how to assemble and present that information.

1. What Integrators Need to Measure –
Business Intelligence

2. “Knowledge isn’t power…the right knowledge at the right time is
power.”

3. GoToWebinar
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4. Brad Dempsey - Background
• Founder of Solutions360 Inc. in 1988
• Primary architect of Q360 ERP platform
• 33 years of international project and financial management
experience
• Started career working for computer companies TRW Data
Systems, Prime Computer, Apollo Computer and Sequent
Computer
• Started as a CET bench tech, and progressed to roles in tech
support, technical education, systems analysis, sales executive,
software developer, technology manager and business
consultant

5. What gets measured …
Gets done.
This presentation is based upon our experience implementing
business process improvements and ERP systems over the last 25
years.
We believe the following KPI’s, metrics, financial indicators or what
ever you want to call them, are the foundation to begin taking
financial and operational control of your business.
Changing “what facet” of your business would have the greatest
impact on success? Whatever the answer, you had better have
a KPI to measure it.

6. We Are Always Refining
We can’t say enough about the importance of revisiting your
processes, measuring their success, challenging them and
improving them, followed by continuing education.
We believe in:
“A culture of constant improvement”

7. Glossary
GM = Gross Margin
– Dollar value of revenue minus cost of goods
GP = Gross Percentage
– GM$ / revenue$
Funnel – Also called pipeline, represents business to close
Project – longer term unit of work with more complexity,
usually earns revenue as work is completed
Call – sometimes called a ticket, a shorter unit of work,
usually completed within a fiscal period
Contract – a service or warranty contract
Brokerage – or box sales, simple sale of product without
labor

8. Overview
We are going to discuss 5 key areas
Each area will be defined
If applicable, examples will be given
An example dashboard screen shot will be shown
Suggestions for improvements to business processes to drive
each KPI will be presented at the end of each area
A sample live dashboard / BI screen will be reviewed at the end

9. 1. Cash / Working Capital
Cash is king
Businesses fail most often because of lack of cash not revenue
Review your cash dashboard every day
We commonly see a lack of cash forecasting

10. Cash vs. Revenue
An invoice billed is not always revenue, and a check cut is not
always an expense
– When a pre-paid service is invoiced, it becomes a liability on
your balance sheet
– When you pay for services before you use them, the become
an asset (prepaid expense) on your Balance Sheet
– When the service or product is actually delivered, and the
cost is incurred, the revenue can be recognized
– Deferred revenues and prepaid expenses are proper
accounting, but they complicate discerning your actual cash
position

11. Cash vs. Revenue
Project “Percentage of Completion”
– If you are running large projects and using a cost to cost
method, your under/over billings are actually assets and
liabilities on your Balance Sheet

12. Working Capital
Layman’s Terms
– How much cash and receivables are left after subtracting my
short term payables
– If Inventory is a big part of if current assets, you may want to
exclude it when measuring liquidity
– FIFO, LIFO and “FISH”
- First In First Out
- Last In First Out
- First In Still Here
Technically
– “Working Capital = Current Assets – Current Liabilities”

13. Cash Dashboard

14. AR Aging

15. Business Process Changes That
Can Improve Cash Flow
Get deposits (pre-payments) if possible
Invoice as quickly as possible after service delivery
– Work completed is fresh in your customer’s mind
– Clock starts ticking right away on the aging
Invoice accurately
Follow up on invoicing quickly to identify any disputes while they
are still “manageable”
Maintain a very close eye on over / under billing
Just in Time purchasing
Consolidated purchasing

16. 2. Sales Funnel
Sales Funnel or Pipeline or Forecast
– Defines business which has not booked or closed yet
Proper tracking requires strict definitions for
– Close date
– Percentage probability of closing
– The sales process
– Historical metrics to be used as benchmarks

17. Sales Funnel

18. Sales Funnel

19. Sales Forecast

20. What Does 50% Probability Mean?
Define a structured process for each type of sale
You must be able to measure the completion of tasks to achieve
each level of probability
Every sales rep must use the same criteria for measurement
Example 50% criteria:
– We have identified the competition
– Engineering has signed off on product fit and preliminary
drawings are attached to opportunity
– Customer’s budget has been approved

21. Funnel / Sales Process

22. Dashboard

23. Business Process Changes That
Can Improve The Sales Funnel
Define your key data points and document them
Create structured sales processes (funnels) for each type of
sale
Measure the accuracy of your sales processes and continually
refine them
If you are going to lose, lose early
– disqualify quickly and ensure qualified prospects close
– labor is your most precious resource, don’t waste it
chasing poor leads

24. 3. Fixed Costs
AKA “the nut to crack”
What costs do we need to overcome every month that are
recurring?
“It is imperative that management knows what contribution
margin dollars they are accumulating daily or monthly to crack
the nut. In the short term, it is nearly impossible to scale back
the nut. For this reason, you need to be able to project short-
falls so you can manage cash needs. Lack of cash flow kills
much faster, than does lack of profit.”

25. BEP (Break Even Point)
BEP - Contribution margin dollars equal the fixed expense
dollars
What revenue level equates to BEP?
– divide your contribution margin dollars by the contribution
margin percentage
– If your fixed nut is $400k, and your contribution margin
percent is 25%...then your revenue dollars must be $1.6M to
break-even. Revenue of $1.6M times 25% = $400k
Contribution Margin = Fixed Cost.

26. BEP (Break Even Point)
Obviously no one wants to only break-even. Add your desired
profit dollars to your fixed cost nut to figure out target revenue.
– (Fixed cost $400k +$100k profit) / 25% margin = target
revenue of $2M. $2M x 25% = $500k.

27. Dashboard

28. Business Process Changes That
Can Improve Managing Fixed Costs
Labor utilization – improving your utilization rate will move costs
from SG&A to COGS
Automate administrative processes

29. 4. Backlog / Burn Rate
Do you run projects using estimated cost of completion?
Backlog = Size of contract – Revenue Earned
Your WIP (Work In Process) schedule should give you your
overall backlog

30. Project Backlog

31. Manage the Budget

32. The Four Key GP’s
To take control of your projects, track the 4 GP’s
– Original GP of the deal
– Projected GP including change orders
– Actual or Cash Real Time GP, as labor is entered, material
shipped and invoicing completed
– Posted GP – the income statement

33. Project Profitability

34. Backlog Burn Rate
Your Burn Rate is how fast you eat through your backlog
Example:
– You have budgeted sales GM of $100k / month
– You have a backlog of $300k
– Now, if your sales cycle is 4 months, you are toast!
You may want to show “backlog months” on your WIP report
– Open backlog / monthly sales

35. Backlog Burn Rate
At the current level of operations, how fast are you burning through
existing sales backlog? The increment or decrement in monthly
order backlog is much more important than the aggregate dollar
backlog of orders.
Since gross margin pays the fixed cost nut, it is also imperative that
you know the GP percentage of new work acquired. You may be
accumulating new work at $6M per month, but if it is at 2/3’s your
previous GP percent…you are still going to fall short.

36. Dashboard

37. Business Process Changes That
Can Improve Managing Backlog
Manage your sales funnel with an eye to the future
Calculate and measure your projects in as close to “real time” as
possible
Have regular meetings to review the key 4 GP’s
By better understanding your historical projects, negotiate terms
that help with your project cash flow
Adjust your assumptions/estimates based upon actual historical
execution of similar jobs
By following these steps, you will have more time to make
adjustments to fixed costs

38. 5. Profitability by Group
When we talk about profitability, we are referring to measuring
Gross Margin dollars. Some example groups:
Customer or Customer Group
Revenue (Product) Stream
Type of work (projects, service calls, contracts, brokerage etc.)
Branch
Department
Geographic territory (state, city, province etc.)

39. Profitability by Customer

40. Dashboard

41. Business Process Changes That
Can Improve Profitability by Group
Know your quoted GM and manage delivery to meet it
Use historical GM to more accurately quote
Optimize your labor force through
– improving scheduling
– measuring GM/Hour by unit of work

42. Summary
1. Cash
2. Sales Funnel / Forecast
3. Fixed Costs
4. Backlog Burn Rate
5. Profitability By Group
Let’s look at an example of what your dashboard may look like:

43. What Comes Next?
These 5 KPI’s are just the foundation
When designing your business processes remember the end
goal, which KPI will this change improve?
If there is interest, we can go in to great detail on one or more of
these specific KPI’s in a future seminar

44. In Closing
“The sting of change is nothing compared to the pain of
obsolescence.”